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WOLF BLITZER, CNN ANCHOR: I'm Wolf Blitzer in Washington.

We want to welcome our viewers in the United States and around the world to a special edition of the SITUATION ROOM.

For the next hour, I'll take you behind the scenes to my extraordinary trip to Egypt to see if democracy is taking hold or being threatened. I had some very tough questions for Egypt's new president. Stand by for morning exclusive reporting from the most important Arab nation in the world.

I have covered the Middle East for decades, but learned a lot during my trip to Egypt, I saw firsthand how one of the United States' most important friends in the Middle East is struggling after its revolution two years ago. I spent more than an hour talking exclusively with the Egyptian president, Mohamed Morsi. He welcomed me to his presidential palace in Cairo. And I toured the city's famous Tahrir square, where the Arab spring demonstrations changed the course of history.

(BEGIN VIDEOTAPE)

BLITZER (voice-over): I stood in Tahrir square few days ago, the symbol of the revolution was largely deserted. It looked very different two years ago, during those intense days leading up to the overthrow of the Egyptian president, Hosni Mubarak. Horses charging into the crowds. Tanks and armored vehicles and snipers all over the place. Hundreds of Egyptian protesters killed. And then it was over. The Arab spring had come to Egypt. Those were days of high optimism.

I was in Egypt with secretary of state Hillary Clinton a few weeks after the revolution. We walked around Tahrir square with little security. Egyptians were thrilled to see her.

(APPLAUSE)

BLITZER: I remember the near euphoria when she went to the nearby U.S. ambassador to thank the American diplomats for all their hard work during those tumultuous and historic days.

Madam secretary, what do you think about Tahrir square? Were you moved by what you saw there?

HILLARY CLINTON, SECRETARY OF STATE: Well, it was very exciting and moving for me to go to Tahrir square and to have some sense of what those amazing days must have been like here in Cairo. And I am so looking forward to helping in any way that we can, in this transformation, and all the work that needs to be done.

BLITZER: That was then. This is Egypt now, huge concrete blocks surround all the entrances to the U.S. embassy. That reads graffiti reads no Morsi, free Egypt, free Palestine, no America.

Last September, anti-American protesters stormed the compound, scaling the walls and burning the American flag.

President Obama had to personally phone Egyptian president Morsi to get the Egyptian military and police finally to stop the assault and protect the American staff. Security is very tight at the embassy now.

Come on over here, you can see -- we can walk over. You can see the barricades outside the embassy, and if you take a look right behind the barricades you can see the American flag flying on the U.S. embassy grounds. It is a huge complex over there. It is one of the largest U.S. embassies in the world. And you can see more barricades over here, where only what -- half a block or so from Tahrir square. We're heading over there right now.

I went back to Tahrir square with CNN's Ian Lee, who is based in Cairo and covered the revolution.

IAN LEE, CNN CORRESPONDENT: About 60 yards, 70 yards, you have the American embassy this way.

BLITZER: There were folks still living in tents, but there was no traffic and few protesters.

Give you a little tour of Tahrir square over here because we're going to walk around, we can see the tents. There are folks still here. But this is a lot different than it used to be.

LEE: This is completely different than it used to be. Right now, we just have remnants of the protests that we saw before it lead up to the constitutional referendum. People are really upset with President Mohamed Morsi and wanted the cancellation of the referendum. This is not really what we're seeing right now is not really popular among the people. If you go outside of Tahrir square, most people say it should be opened and functioning again, again, it is the heart of the city. But, there are still a lot of people that are upset with the president and we are seeing --.

BLITZER: So, these folks here, in these tents these are the opposition to president Morsi?

LEE: Yes, a lot of them are the opposition, but they don't make up all the opposition. A lot of the opposition makes up poor to wealthy people.

BLITZER: On the walls around Tahrir square, the graffiti tells the story of these Egyptians revolution. I took another tour with Ahmed Seddik, an Egyptologist and guide here in Cairo.

Ahmed, let's take a little walk down all this graffiti. Tell us what we're seeing over here.

AHMED SEDDIK, EGYPTOLOGIST: Well, you know one of the key demands of the revolution was to clean up the police because of the criminal activity of the police and the nefarious activities involved. And so, here you see the police are still criminal. So they have not restructured the interior yet. And you still have massacres and violations of human rights.

BLITZER: These were some of the people killed during the revolution?

SEDDIK: Yes, and afterward, as well. Then you have the president in the garb of the pharaoh. This is (INAUDIBLE), identified --

BLITZER: President Hosni Mubarak.

SEDDIK: Pharaoh -- no, here, Morsi.

BLITZER: Yes, President Morsi, oh, I see, yes.

SEDDIK: And it is invalid.

BLITZER: So these are anti-President Morsi graffiti.

SEDDIK: Yes, and then you have in red, that means no, no for the constitution of the brothers.

(END VIDEOTAPE)

BLITZER: Stand by for my exclusive interview with the Egyptian president, Mohamed Morsi. Do his critics risk being thrown in jail?

(COMMERCIAL BREAK)

BLITZER: It has been two years since the Egyptians set the tone for the Arab spring, they took to the streets calling for change, toppled their long-time leader, and paved the way for Democratic elections. The winner was a long-time Muslim brotherhood leader, who is now President Mohamed Morsi. But, he has been accused of steering Egypt back towards a dictatorship and trampling on human rights.

I had some tough questions for the Egyptian leader during my exclusives interview with him.

(BEGIN VIDEOTAPE)

BLITZER (voice-over): During my lengthy interview with the Egyptian president, Mohamed Morsi, in his presidential palace in Cairo, I raised the case of three prominent Egyptians who sharply criticized Morsi, and who have been investigated for treason as a result.

The Nobel Prize winner and former head of the International Atomic Energy agency, Mohamed ElBaradei Arab league, the former head of the Arab league, Amr Moussa and Egypt's top television satirist, the so- called Jon Stewart of Egypt, Bassem Youssef, who has made a lot of fun of Morsi. Their cases underscore the fear that Morsi and his Muslim brotherhood supporters could destroy the Arab Spring promise of real democracy and freedom.

That raises real concerns, what is going on with the democracy in Egypt?

MOHAMED MORSI, EGYPTIAN PRESIDENT (through translator): Democracy in Egypt and freedom are abided by and opposition in Egypt is respected and appreciated. For those to express their opinions and their points of view in Egypt now and in the Egypt's future, and to be a true partner in opinion and vision, effective criticism, and constructive criticism. All of this is a right guaranteed for opposition in Egypt.

There are some challenges. There are some acts that don't comply with the law that is addressed in the judicial system. And the law and the president of the republic. It is not my right to interfere in what the procedures of the courts and what gets applied to and applied by the law.

BLITZER: And they could criticize you without fear of going to jail?

MORSI (through translator): This happens every day. Anyone can say from the opposition whatever they want for the sake of the interests of the nation. And no one should be afraid of the opposition.

BLITZER: That is very encouraging to hear that from you, the president of Egypt. And as a journalist, I want freedom of the press. You want freedom of the press. And there is a case, though, of the satirist, the popular satirist Bassem Youssef, who is also being investigated for supposedly ridiculing you and the government.

MORSI (through translator): Whoever criticizes me has to legal right to do so. If there are some legal measures and some of the Egyptians filed complaints in this respect, this is the issue that gets handled within the judicial system and the courts, not to me.

This is a full-fledged system, and therefore I welcome any criticism. I welcome every opinion. I welcome every view and I push everyone to work.

BLITZER: But just to tie up this issue, Bassem Youssef, Amr Moussa, Mohamed ElBaradei, they don't have to worry about going to jail?

MORSI (through translator): They are Egyptians, they are part of my family from Egypt. There is no way that any harm can come to them because of their opinions, of their personal opposition, there is no possible way to talk about or discuss jail or imprisonment as an option because political involvement according to the law. There is no possible way to discuss this.

BLITZER: We called Bassem Youssef to get his reaction. He says he has heard about the investigations but says so far he has not been summoned. He says he is worried about he described as behind the scenes actions taking place. We read him what Morsi said in the interview. If the president says he is not linked to the lawsuit, it is music to my ears, he says, I have to believe him, I thank him and I say I am glad he has nothing to do with it.

And we got this reaction from former Arab league head, Amr Moussa. I wish to thank the president for the assurance he has publicly given to CNN. I trust that these guarantees will apply to all Egyptians who should enjoy free expression of opinion.

There is another great fear in Egypt right now, one especially worried some to 10 percent of the Egyptian population, Christian cops. There have been church burnings, including this one in Alexandria. They worry that the Muslim brotherhood's new influence will undermine their ability to practice religion freely and openly. Here again, Morsi tried to reassure them.

How worried will these people be that Egypt will leave democracy and become strictly another totalitarian Islamist state?

MORSI (through translator): There is no objection in Islam to democracy. We move as Egyptians, Muslims and Christians, rich and poor, all Egyptians to new heights of democracy. There will be no going backwards, not to the previous period or to dictatorship at all.

And this is what I abide by and I insist upon. And we gain everyday new heights in the context of applying and practicing democracy with complete freedom for all Egyptians.

BLITZER: But you know there are a lot of Egyptians, Christians, cops, who are very frightened right now and worried that their country, Egypt, country where they lived forever, is moving in the wrong direction.

MORSI (through translator): Those people are my beloveds. And the children of the nation, the Christians and their brothers, the Muslims. There is no room to worry at all and the rights of all Egyptians in this nation are equal. The same rights for everyone. And they have the same obligations. The children of Egypt can't be divided at all because of their belie believes, practices or their worship. We are all Egyptians.

BLITZER: What is your message to them about the religious freedom of cops, of Christian cops in Egypt?

MORSI (through translator): The freedom of belief and the freedom of practicing rituals of worship, for Christians and Muslims, everyone who has a belief. For the first time in history, there is a special portion in the constitution for Christians and Jewish Egyptians and their right to return to and resort to their private matters based on their rituals and prescribe to their believes and religion.

BLITZER: One of your advisers, speaking of Egyptian-Jews, caused controversy the other day when he suggested that Egyptian Jews living in Israel should come back to Egypt. MORSI (through translator): These words were said in a specific context and the one who said it, said it in this way to demonstrate what he wanted to say from his point of view. But there are many media outlets that removed it from the general context. However, he is no longer an adviser to me because now he is a member of the legislative counsel in the Sharia counsel, and he is most likely a leader on this council and does not right to group the legislative counsel and the executive council together in this stage because he is not my adviser now.

BLITZER: CNN correspondent Ian Lee has been there for several years, and speaks Arabic. He says there are serious divisions in the country.

So talk about those divisions.

LEE: Well, on one side you have the opposition which in the past has been an unorganized, this time, against president. They seem to have somewhat of an organization. And on the other side you have the Muslim brotherhood, you have the ultraconservative Salafis. And you do have people who want stability in Egypt and they say whoever leads us, we just want the country to move forward. So, you have two camps, both sides, who believe they're right. Both sides vying for power.

BLITZER: Standing on the bridge over the Nile River, the Egyptologist, Ahmed Seddik says the future of Egypt will largely depend on the economy.

And we're watching it obviously closely to see what is going on.

SEDDIK: I think if the economy recovers, all of this will disappear.

BLITZER: Morsi's bottom line, please be patient with the new Egypt. He has only been in power for six months. Real change takes time.

You probably saw the "Time magazine" issue, where the president of the United States is the person of the year. But you're not that far behind because number four, Egyptian president Mohamed Morsi, you can see right there. And you read the article. I assume you read the article?

MORSI (through translator): Yes.

BLITZER: About you, and there was an interesting line, and I'll just get your quick reaction to it. Mohamed Morsi, the power broker, Egypt's new president won kudos abroad and curses at home. What he does next could determine the shape of the Middle East. What he does next could determine the shape of the Middle East. You appreciate the responsibility you have right now?

MORSI (through translator): The victory of the Arab Spring and the respect of people's will. This world should realize that the will of the people will win over and will prevail. So let's cooperate for the sake of stability and not interfere in the affairs of Egypt and not allow hegemony. Peace for all, stability, freedom for all within their nation. The Arab spring will win over. And this area shall civilize, but of course, we can't work in isolation from the world. We love this world and we want to live in peace. We'll work on that, and the will of the people from the region well prevail and win over in the near future.

(END VIDEOTAPE)

BLITZER: President Morsi tells me he is planning to come to Washington to meet with President Obama very soon.

Also in the process, he will make a stunning request to the United States about the fate of an Islamic cleric convicted in the first world trade center bombing. That and more coming up.

(COMMERCIAL BREAK)

BLITZER: Egyptian president, Mohamed Morsi, is the highest profile leader to emerge from the Arab spring revolutions. But as tenure has been marked by controversy after Syria's concern for the Obama administration which relies heavily on Egypt as a key ally in the region.

I asked President Morsi about that during my exclusive interview with him at the presidential palace in Cairo and he revealed his plans to visit the United States.

(BEGIN VIDEO CLIP)

BLITZER: When will you come to the United States? When will you meet with president Obama? What do you think of President Obama?

MORSI (through translator): God willing, I will plan for this trip. There is no set date yet. But it will most likely be before the end of the first quarter of this year. President Obama is an elected president by the American people and he grants the will of the American people by working for the interests of the American people. And this is the American people's right in their president.

I respect him and I value him. He played an effective and an important role in the ceasefire in regards to Gaza, the end of attacks against Gaza. He cooperated with us in a big way. I'm still in constant communications with him. When we meet, there will be a chance to talk about cooperation in different areas like scientific research, manufacturing and production, investments and tourism.

BLITZER: So you plan to coming to the United States, God willing, in Shala as we say, in the first quarter, between now and end of March?

MORSI (through translator): Before the end of the first quarter, God willing, I will visit as you said I will visit the United States of America. And I will be happy with this visit.

(END VIDEO CLIP)

BLITZER: I also asked president Morsi about the blind Egyptian cleric, who was convicted in connection with the 1993 World Trade center bombing in New York. Omar Abdel-Rahman is serving a life sentence in the U.S. prison.

President Morsi told me he plans to ask President Obama to free the Sheikh for humanitarian reasons.

(BEGIN VIDEOTAPE)

BLITZER: Just clarify your position and what you want the U.S. government to do as far as the blind sheikh is concerned, who is being held in prison in the United States, convicted for his involvement in the blowing up of the 1993 World Trade center bombing incident.

MORSI (through translator): I want him to be free. But I respect the law and the rule of law in Egypt and the United States. What I am talking about is not a violation. I don't want a violation of the rule of law, but there are also many humane aspects. There could be things like visitation, assistance, his children, his family, assisting him. He is an old sheikh and sick and blind. We need to respect that in he is a sheikh.

Is there a chance for him to be freed? I wish this. But considering my respect and appreciation for the American rule of law and the American government, our relationship, Egypt's relationship with America deserves that these issues be reviewed, if that is OK, according to the law.

If it is not possible, and I hope that it is possible, if it was impossible, then these humane as aspects need to be taken into account for him to be in a humane prison to be able to have visitors, to be able to have company, to be able to visit with his sons and children, for his family to visit, for us to see him, for people to see him and know how he is doing because he is a man, an old man, and he deserves full care.

I wish that there could be a big possibility for the American administration to look into this matter about this sheikh who is very old. Without there being -- I don't intend on violating the rule of law in any place, and I don't like anyone asking me to violate the rule of law in my own country. But the humane aspects, at the very least need to be guaranteed.

BLITZER: Will you make this appeal directly to President Obama when you see him?

MORSI (through translator): When I meet with him, I will talk to him about this issue.

(END VIDEOTAPE)

BLITZER: I also asked president Morsi where he stands on the vital questions of peace in the Middle East. Will he continue to honor the peace treaty Egypt has with Israel? Does he believe Israel has a right to exist? That is coming up.

(COMMERCIAL BREAK) BLITZER: Welcome back to a special edition of the SITUATION ROOM. My reporter's notebook on my extraordinary trip to Egypt.

I got to look the country's new president, Mohamed Morsi in the eye, and get a measure of where he stands on issues that are crucial to the region including Egypt's resolutions with Israel. Here's more of the exclusive interview.

(BEGIN VIDEOTAPE)

BLITZER (voice-over): Israel came very close to a full-scale war only weeks ago when its long conflict with the group, Hamas, reignited. Behind the scenes, Egyptian president Morsi was playing decisive a role in brokering the ceasefire.

MORSI (through translator): I want peace for Egypt for the Egyptians people, for the Palestinians.

BLITZER: It was a very tense time in the region, and I was there when a truce agreement was reached.

Happening now, historic development to the Middle East. The secretary of state, Hillary Clinton, and her counterpart from Egypt, new Islamist governments announce a major deal between Israel and Hamas.

President Morsi's role in the truce negotiation earned him praise from President Obama, secretary of state Hillary Clinton and Israeli leaders.

He is doing a good job, you believe?

SHIMON PERES, ISRAELI PRESIDENT: I think he is doing a responsible job from his point of view. I don't want that somebody will think that he is not acting -- his heart is somewhere else. But his behavior is responsible. And because responsibility is need for everybody, not only for us and for them.

BLITZER: Now, Morsi says he wants to reconcile the differences among the Palestinians themselves, that may help lead to a long-term peace.

Do you believe that a two-state solution that will allow Israel and Palestine to live side by side?

MORSI (through translator): The Palestinians have the full right, without any interference from anyone, to decide whatever they want for themselves. And now I'm looking forward, and I'm working on achieving reconciliation between the Palestinians, between Fatah, and the other factions, Hamas and others, to reach consensus.

And it is they who will decide. I support them in what they decide. They are - they have the right. They own the right. It is only they who have the right to decide on their destiny. And by the way, this is stated in the peace treaty. The Palestinians decide on what they want. I'll respect their decisions.

BLITZER: Morsi told me, he has invited Palestinian authority President Mahmoud Abbas, to meet with Hamas leader, Khaled Meshaal, in Cairo this week, a critical question that may be up for discussion, does Israel have the right to exist?

MORSI (through translator): The truth is, I have already answer this question before this many times. Israel is a U.N. member, so the question seems strange, because the party who needs a place and state are the Palestinians.

I am not discussing the bias of one against the other, but I'm talking about the real situation that exists now. Israel is a member of the U.N. The ones who need a state and to have an entity and for this state to be a full pledge member of the U.N. are the Palestinians. So, that is why I'm talking about reconciliation among Palestinians.

It is not possible to achieve peace and stability, unless it is for everyone involved. So, if the Palestinians continue suffering, if the Palestinians continue suffering from attacks, if the Palestinians remain without a state, if the Palestinians remain without a full acknowledgment from the whole world that they have full rights, this means peace will not be complete in the Middle East and the world.

What do we want for this world? We came with a message of peace. We want peace, but we want real peace. And a peace treaty. It is stated at the beginning of it that peace should be comprehensive and just. And this matter is known and it must happen. And it has not come true yet. We want a comprehensive and just peace for this world.

BLITZER: I have covered the Middle East for decades. I was CNN's senior White House correspondent during President Clinton's peace summit with Israeli prime minister Yizhak Rabin, and the Palestinian leader, Yasser Arafat, back in 1993.

Every American president who has tried to ease Middle East tensions has found that face to face talks can certainly make a huge difference.

Under what circumstances would you be willing to meet face to face with the Israeli president, Shimon Peres or the Israeli prime minister Benjamin Netanyahu?

MORSI (through translator): When peace prevails in the Middle East, when Palestinians take their full-pledge rights, when the Egyptians with their free will and complete freedom see that there is no Palestinian bloodshed and that the Palestinian rights are not wasted. And that the public platform in Palestine has one government, and that it is stable, and it has free will, land and borders. The whole world should realize there can never be peace without having peace for all, and without having all rights for the Palestinians, full rights, according to their own will.

This is something that the whole world should realize. I cannot move forward, and it is not possible for me to move forward outside the will of the Egyptian people. The Egyptian people can see, listen and live and feel and understand. And they do see the Palestinians as their brothers. They can see their sufferings, et cetera. This matter requires longstanding and strenuous efforts, and the will and understanding of the Egyptian people. I cannot work outside the will of the Egyptian people. The public opinion in Egypt now sees that the Palestinians are marginalized. And their rights are waster that Gaza is still destroyed and has not been reconstructed. And they don't have a state. They don't have complete passports. They don't have freedom of movement. They don't have a central bank or armed forces or a real capitol. They suffer a lot every day.

When the Palestinians get their full rights, then we can look towards the Egyptian people and see what they want their president to do. And then, the president will act based on the will of the Egyptian people, not alone.

BLITZER: In other words, if there is such a meeting between you and the Israeli leaders, will have to be a wait, until there is an agreement between the Israelis and the Palestinians?

MORSI (through translator): I believe this question is not on its place now. Between us and the world, there are diplomatic relations and everybody knows that. So, I see that this is not the place for this question now.

I respect the peace treaty. I'm keen on what Egypt has signed previously at the international level. I respect the will of the world, but this does not conflict at all with my support of the Palestinians and their full-fledged rights, and that they obtain them. When this happens, the Egyptians will express their views.

BLITZER: Old hatreds can explode in violent at any moment. I saw that again on the day when the current truce was reached. It is a ceasefire that supposed to end eight days of terror and bloodshed on both sides of the Israeli Gaza border. But the hours leading up to the big announcement are marred by violence, including on a bus bombing and injured nearly two dozen people , right in the heart of Tel Aviv.

Egypt made its peace with Israel more than three decades ago. The two countries signed the treaty at the White House in 1979, just after President Jimmy Carter finalized the pack with Egyptian president, Anwar Sadat, and Israeli prime minister, Menachem Begin. It survived all of these years, and Morsi insists he will continue to honor it.

For about 30 years, the United States has had about 700 American soldiers as part of a multi-national peace-keeping force in Sinai. Do you want those troops to remain in Sinai?

MORSI (through translator): Egypt is a large and old country, a member of the United Nations, and before that, the league of nations. As a state and as an institution, Egypt knows the meaning of international organizations and respecting agreements and treaties and international laws.

We have ambassadors in almost all countries of the world. We respect and appreciate international institutions and the international law. And we cooperate with it. We develop and move forward, and we want the world to cooperate with us also.

Therefore, we appreciate these agreements. We appreciate those treaties. We respect them. We retain them. There is no room for criticizing them or talking about anything against them as long as we're all committed to the content of these agreements. All the parties that seen any agreement or treaty are committed to them. If any party breaches these commitments, every party involved needs to confront itself and be honest with itself.

But we respect all the agreements that Egypt signed previously. And Egypt is moving forward with the international community. And we respect the international community and the will of the international community.

(END VIDEOTAPE)

BLITZER: I saw firsthand how Cairo's Tahrir square has deteriorated. And I asked president Morsi about that and the state of Egypt's security.

(COMMERCIAL BREAK)

BLITZER: President Morsi wanted to speak mostly in Arabic, but we did speak in English, as well. Remember, he spent seven years in the United States. He studied at the University of southern California where he got his doctorate. He will talking in English a little bit. I want to show you what I saw during my trip to Cairo's Tahrir square, the heart of Egypt's revolution. It is dirty, dismal, depressing. And I raised that with president Morsi during the interview.

(BEGIN VIDEOTAPE)

BLITZER: I was at Tahrir square today, it was pretty quiet. I didn't see many demonstrations.

MORSI: Yes, it is. But sometimes the media is -- exaggerating things, the international media. There is competition also, in tourism in the world. This competition, too, means some of it is too exaggerate the situation, and to try to show as if security in Egypt is something wrecked which is not correct.

BLITZER: Yes.

MORSI: We don't have more than one per square of land which is suffering from the demonstration, sometimes, not all the times. But the rest of Egypt -- the rest of Cairo is quiet and good.

BLITZER: If you get this loan, this $4.8 billion loan from the IMF, that will happen?

MORSI: That helps, that helps, doesn't solve the problem, it helps.

BLITZER: What is the most important thing when you come to the United States you would like to hear from the U.S. government?

MORSI: The most important thing for me is to have real friendship between Egyptians and Americans.

BLITZER: So what does that mean?

MORSI: Yes, what that means is mutual balance with the relationships, mutual benefits. Now, I need the technology transferred. I need scientific research. I need expertise in different directions to help. I have resources. Now, experience with the United States, as far as planning, as far as implementing, as far as producing in different directions, real production. So there is -- a lot of things that I want to transfer from the United States to Egypt.

BLITZER: So you will ask the president, the congress, when you come to Washington.

MORSI: Yes.

BLITZER: You will ask for this type of assistance?

MORSI: Yes, of course. Yes. Also, Egypt is very important to the United States.

BLITZER: Egypt is very important to the region.

MORSI: Yes, yes.

BLITZER: As I said in our interview before, it is the most important country in the Arab world.

MORSI: Yes, it is, yes, it is. So this important country should be helped. You should stand to the side, to the people's side.

BLITZER: I heard rumors that you are thinking of expanding the Suez Canal, is that true?

MORSI: No, not expanding, improving.

BLITZER: What do you want to do?

MORSI: I'm talking about investments along the Suez Exacanal. We have almost 200 kilometers (INAUDIBLE) between Suez and (INAUDIBLE), and this can be an area where you can invest -- have investors from outside and from the Egyptians, also, can make real production area, industry. We -- I want to have this area as a real advance, developed area along the Suez Canal.

BLITZER: So, you're looking for foreign investments?

MORSI: Yes, why not.

BLITZER: Not only from the U.S. --

MORSI: Yes, yes. From China, from Russia, from the Arabs, from the Egyptians, outside also from Europe, from well, you know, the real key entrance to Africa is Egypt, the logistic help to investors from Africa can start from Egypt. We have the Suez canal, we have seashore from the Mediterranean sea, we have the Nile River, we can go with the people from Africa to Sudan, to Libya, also --

BLITZER: Give me a thought about the Arab spring in North Africa and the Middle East. Because I came here after Mubarak was gone, with Hillary Clinton, the secretary of stet. And I remember we got up one morning and she, without much security, we just walked around Cairo. She walked into Tahrir square. People were applauding her. It was a very optimistic moment, right there. It is almost two years ago. But then, all of a sudden, things got gloomy.

Give me thought about the Arab Spring?

MORSI: This is natural. This is normal, when you move from, you know, from a dictatorship, from absence of, you know, from corruption, big corruption, to new position, to freedom, to democracy, to -- well, a case where you try to prevent, to stop, to block corruption.

When people are moving like this, and they are in big numbers like in Egypt, and they have real daily needs and they need food and shelter everywhere. And they want the freedom to be completed. And they worry about what they had in the past and they are afraid from going back to that. I think this kind of activities, this kind of demonstrations, these kind of trying to resist to some extent any kind of feelings that we are probably, will go back to some extent. All of these, I consider the situation, it is a normal situation. And the people gaining by time - experience and how to transfer the feelings and to the real production, to be an excellent on the ground.

BLITZER: So you're optimistic?

MORSI: Very much optimistic.

BLITZER: How long is this going to take?

MORSI: Well, I would say to start real stability and development, the steps may take six months or a year. But to reach what we want, I think we may take five or ten years to reach 60, 70 percent of what we want. We talk economics now.

LEE: We have to be patient.

MORSI: Yes, of course. You're talking about Egypt. You're talking about tens of yea years of corruption. You're talking about absence of freedom, completely. You are talking about the elections all the time. No democracy. No will of the people. Everything goes down and away from the people. So when you change, it takes time.

BLITZER: They even put you in jail. You spent a few months in jail?

MORSI: Yes, of course.

BLITZER: How many months were you in jail?

MORSI: Seven months.

BLITZER: What was that like?

MORSI: Bad. Very bad.

BLITZER: But I mean --

MORSI: I'm talking about freedom. When you are free --

BLITZER: When you are in jail you appreciate freedom when you're out of jail. So you appreciate freedom, having lived through that seven months.

MORSI: Do you think anybody in this month would take freedom?

BLITZER: Some people have had it their whole life and take it for granted. But you appreciate freedom.

MORSI: Yes. Well, I think our grandchildren will take it for granted. But we have been suffering together, and then we are moving together to the new position, real freedom, democracy. Good welfare.

BLITZER: As I said, we're counting on you.

MORSI: Yes, well, let's help each other as much as we can, thank you.

(END VIDEOTAPE)

BLITZER: We posted my interview with president Morsi on line, alone with beside the scenes photos, taken by my producer, Linda Roth. Check it out at CNN.com/situationroom.

After listening to president Morsi, here is the question. Can the United States, can the world trust him? We are going to talk about the interview and his leadership. That's next.

(COMMERCIAL BREAK)

BLITZER: We have been showing you my travels through Egypt and my interview with president Morsi. Our national security contributor Fran Townsend has been watching and she has been listening to it all. She is joining us now.

Fran, what do you think? Is this president of Egypt somebody the U.S. can really trust?

FRAN TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: Well, I think that remains to be seen, Wolf. Look. He was saying the right thing to you about the press, about the will of the Egyptian people. But frankly, he will be judged by his actions and he will be judged by what he can achieve there. He is right to be saying that we need to be patient. You know, look. When we think back in the early days of American democracy, it takes time. It took a very long time for example, for women to get in the vote or African Americans to get the vote.

And so, we need to understand democracy is a process, it takes time. But he also has made statements about the need for a greater influence of Sharia law in Egypt. And so, we can't judge him by his statements. We will have to judge him by the results and by his actions. BLITZER: What did you think, he said that when he meets with President Obama, he will bring up the subject of the blind Sheikh who was convicted on blowing up the World Trade center back in 1993?

TOWNSEND: Look. You remember Tip O'Neill? He is former speaker of the house once said that all politics is local. I think you have to understand who that statement is intended for. That is a domestic political statement. He clearly knows the answer is going to be absolutely not. There will be no discussion, I expect, on the part of the American administration.

Bur remember, if you go back and look at the interview, Wolf, President Morsi was saying it's about the process, he is going to ask, he is going to raise it. But really at the end, it's about humanitarian treatment. He will certainly get reassurances about the humanitarian treatment of the blind sheikh. He won't get the sort of expanded access that he is talking about. But the blind sheikh certainly gets medical attention and, you know, nutritional attention. And he is treated humanely. And to the extends that he is looking for those sort of assurances, I think you can expect the U.S. is willing to give them because that is the way he is treated. I don't expect that the Americans administration will entertain it into the discussion for a transfer the blind sheikh back to Egypt.

BLITZER: Do you expect the Obama administration, their congress for that matter, and continue extensive economic and military assistance to Egypt. While in terms of military, more than billion, close to $2 billion a year, most of it purchasing U.S. made weapons, aircraft, tanks, is that going to the Egyptian, military. Is that quite to continue?

TOWNSEND: Absolutely, Wolf. Look, Egypt remains, regardless of whether it is President Morsi or not, Egypt remains an incredibly important ally in the region. Both is for United States Interest and of course, for Israeli interest.

I thought it was a little unfortunate, in the interview, he talks about, when you asked about engagement with Israel, President Morsi hedged and he talked about he can go as far as the will of the Egyptian people. And what I say, Wolf, is real leadership is about leading your people, right? And so, President Morsi, one would hope, can mature to a point as a leader where he can sort of help lead the will of the Egyptian people to greater engagement with Israel. As opposed to waiting for the Egyptian people to let him know when it's time.

BLITZER: Fran Townsend, thanks very much.

TOWNSEND: Thanks, Wolf.

BLITZER: Just ahead, my final thoughts on Egypt's president and the turmoil of the Middle East.